Summary of last week's article, Our World Balances on a Sea of Debt.
Our economy is a fraud. The banks are lending out money that doesn't exist, (the so-called fractional reserve lending), in a bizarre virtual economy.
The exponentially growing virtual economy is forcing the real economy to grow in ways our world can't support. We have to work so hard to increase productivity in order to allow the real world value catch up with virtual value, which is important so that we can avoid inflation. Inflation means that the value of everyone's money would decrease.

So how does inflation work, really?

The apple model, to explain inflation:
Imagine that there are 5 apples on the table, and there are 5 people sitting around the table. If each person around the table has 1 coin, then the way our economy works, each apple will cost 1 coin. If each of us had 2 coins, the apples would cost two coins each. If there were 10 apples, each apple would cost half a coin, or you could buy two apples for one coin.

The apple model, to explain the problem with banking:
Now, if there were a 6th person at the table (a bank), and that person had 25 coins, and the rest of us at the table only had one coin each, then there would be totally 30 coins in the system, and so each apple would then cost 6 coins, because of the total amount of money in the system is 30 coins, and there are only 5 apples. So the cost of the apples rises.The apple model, to explain the problem with fractional reserve banking:
Now, if you think about if that bank was using 'fractional reserve' lending, it means that in fact the bank only has 5 coins, and is lending them out at a 1 in 5 ratio. So the bank appears to have 25 coins, but actually only has five. The bank has a virtual economy reserve of 25 coins, but only an actual economy reserve of five. So in effect, because they're lying about how many coins they have, our apples are costing 6 coins in a virtual economy (25 bank coins plus 5 individual coins divided by 5 apples), when they really should only be costing 2 coins in a real economy (5 bank coins plus 1 coin each of the other 5 people divided by 5 apples)

Conclusion 2:
2 coins is the 'real world' value of each apple, and 6 coins is the 'virtual economy' value of each apple. If you only have two coins to buy an apple, the bank has made it really hard for you to buy an apple. So under this system, people who are not investing money and creating virtual value are too poor to buy apples. Poor people are screwed over in this system.

Conclusion 3:
So when you make an investment, you're creating even more virtual value, and you're actually making it harder for poor people to live. So our economy is evil! It is not just a fraud, It's actualy making poor people work harder for nothing.

So it's better to be owning a bank, right? Can just anyone own a bank?

No, you have to apply from the government.

So who owns the banks in Taiwan? The Tsai's, the Koo's, these rich guys get richer, and the poor guys get poorer. So it's really not that Taiwan is doing the economy wrong, the M-shaped economy is what you get when you do it RIGHT.

So why do we have to have banks?

We need them to borrow money so we can have houses.

But, listen, if there were no banks, then the houses will only be one coin each (=the price of houses would be more or less in line with our income), we wouldn't need to have a huge pool of money to borrow from.

Well, we need banks, but how about we just outlaw fractional reserve lending. Then we won't have this runaway exponential growth.

Wait, if we outlaw fractional reserve lending, then we only have those 5 coins to lend out from the bank, then interest rates will skyrocket, because the cost of borrowing money will rise, because there's less money to borrow/lend.

Okay, so let's just outlaw all interest!

But!! If we outlaw interest, how does the bank cover its costs? How do they pay electricity, or pay Fanny's salary (very important!!!), and stuff?

Question: How do banks work as pools of money for large projects, if there's no interest?

Time banking is a reserve-less system. There are no pools of money. Value is created on demand, and let go when needed.

The problem is, how does the MRT system get built?

Oh, wow. That's a very good question.

People donate their labor?

So then it turns into a corvee?

What's that?

Corvee = forced labor. When a population has no money, the gvt asks people to pay in labor, they get fed (badly!) by the gvt and they work for free. Think the Great Wall of China.

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We cannot opt out of our economic system, so we're 'slaves to the system'.

We are all complicit in the system. Even though we can't opt out, we also continue to help create this system.

So in the article Guppy suggests having small local currencies. I think this is a bad idea, because it would lead to money exhangers, who are people creating virtual value out of nothing. I think it's better to go to a single currency.

But the Euro is in trouble?

Why is it in trouble?

The apple model, to explain the Euro's problems:
In Europe, one table (one country's economy) has 5 apples, and one table (say the Greek economy) has 1 apple. So on the 5 apple table, each apple costs 1 coin, but in, say, Greece, each apple costs 5 coins, because we're using the currency based on the economy of the 5 apple table. So using the same currency means that it's harder for some groups.

Why can't they just say they're a double table with an economy of 6 apples?

Because they're separate tables!

So the problem is national borders!

So the problem in Europe with the Euro, is not that there's one currency, the problem is that there's still national borders (separate tables).

So if you want to have a one currency world, then you have to only have one government.

Why are you always so stuck on having one currency? You're always on about the one currency!

No, it's better that we just go back to national currencies.

But the problem then is if I have German coins and I want to buy French things, then someone has to exchange the money, and then you're creating virtual value again, through unequal values of the currency, and someone has to be appointed to value the currencies agains each other. And then also you're letting some economies sink and some swim.

So we go back to just trading within our countries. We in Taiwan just eat our own rice, we don't trade with people.

But that's boring!

So you need banks!

No, I want interest without interest!!

Okay but if we go back to just eating rice, it's okay. That's how our great great great grandfathers lived.

I hate to burst your bubble, but your grandfathers' grandfathers, they came over from Mainland China to escape the Ching Dynasty's bad economy, and stole the land from the Aborigines to set up here…

Listen, we need banks, so that we can invest in factories to make lots of pretty things to make our lives nice, because we want things.

But because we desire nice things we're all slaves to our virtual economy.